What Every Real Estate Flipper Must Know Before Borrowing
Flipping real estate can be one of the fastest ways to generate wealth, but it’s also a business that requires access to capital. For most investors, that means borrowing from hard money or private lenders.
At VenusVenture.us, we believe successful borrowing starts with education. Whether you’re flipping your first property or scaling up, here are the must-know basics before you take on financing for your next deal.
1. Understand LTV and ARV
Two of the most important metrics lenders look at are:
- Loan-to-Value (LTV): This measures the loan amount compared to the property’s purchase price or appraised value.
- After-Repair Value (ARV): The projected value of the property once renovations are complete.
Hard money lenders often lend based on ARV instead of current value, giving flippers more leverage. But the higher the LTV, the more risk for both sides—so expect tighter scrutiny if you’re asking for maximum leverage.
2. Rehab Budgets Are Everything
Your budget makes or breaks the deal. Overestimate costs, and you may not get approved. Underestimate them, and you risk running out of funds mid-project.
Lenders want to see:
- A detailed scope of work
- Accurate cost estimates from contractors
- Built-in contingency (typically 10-15%)
This shows professionalism and reduces the chance of surprises.
3. Always Have an Exit Strategy
Borrowers sometimes assume selling quickly will be easy. But seasoned lenders know markets shift, sales take time, and unexpected delays happen.
Your exit strategy should include:
- Primary exit: Selling after the flip
- Backup exit: Refinancing into long-term debt if the property doesn’t sell quickly
The more thought you put into exits, the more confidence lenders will have in your ability to repay.
4. Expect Higher Interest Rates and Shorter Timelines
Hard money isn’t bank debt. Rates are higher, often in the 9–12%+ range, with origination points added upfront. Loan terms are usually 6–18 months, not decades.
The trade-off? Speed and flexibility. Lenders fund in days or weeks, not months, and focus on the property’s potential rather than just the borrower’s credit.
5. Reputation Matters More Than You Think
Numbers are critical, but relationships close deals. Lenders prefer working with borrowers who:
- Communicate clearly
- Deliver projects on time
- Pay back loans as agreed
Even if your first deal isn’t perfect, showing integrity and professionalism can unlock better terms for future projects.
6. How to Present Deals That Get Funded
The flippers who consistently secure capital know how to package deals for lenders. This means:
- Presenting a purchase contract and ARV comps
- Including a rehab budget with timelines
- Showing a clear exit strategy
When you hand a lender a clean, professional deal summary, you stand out—and often get faster approvals.
Hard Money vs. Private Lending
- Hard Money Lending: Structured through professional lenders with defined processes, interest rates, and underwriting standards.
- Private Lending: More relationship-based—borrowing from an individual investor who may be more flexible but less standardized.
Both have their place, but flippers should understand which works best for their goals.
Final Thoughts
Borrowing for a flip isn’t just about finding money—it’s about knowing how to present yourself and your deal. By understanding LTV, ARV, budgets, timelines, and reputation, you position yourself as the kind of borrower lenders want to work with again and again.
At VenusVenture.us — “Smart Solutions for a Better World™”, our mission is to support real estate entrepreneurs with knowledge and funding opportunities that help them scale confidently. While we are a new business and haven’t yet originated loans, we are building systems to make the borrowing process transparent, efficient, and designed for long-term partnerships.